Item 68 - Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washigton Ave.

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Agreements for the Development of the Crossroads at Washington June 21, 2022 Page 3 2 7 6 6 Authority-owned property that has been joined with the County’s property. The Crossroads at Washington project will have 85 new affordable units and 1 manager’s unit, with 42 three- and four-bedroom units for large families, and 43 one- and two-bedroom affordable units for persons experiencing homelessness. 100% of the units will be for extremely low-income households at 30% Area Median Income. For the City Council actions, regarding the two Loan Agreements, on July 2, 2019, the City Council approved an award of $3,971,440 in funding and on August 17, 2021, the City Council increased that award by $333,742 to pay for an increase in development costs. The action herein includes another increase of $339,727 in additional funds to pay for an unanticipated increase in development costs. Regarding the Development Impact Fee Deferral Agreement, this will further assist the project to offset their increase in development costs. Regarding the Subordination Agreements, U.S. Bank and the County of Orange require the City to subordinate our loans to their senior loans. Staff is also seeking approval for future Subordination Agreements by various lenders that may be required after the project is completed. For the Housing Authority actions, the eight additional project-based vouchers are necessary to pay for an unanticipated increase in development costs. Combined the project will have up to 15 project-based vouchers from Santa Ana together with 43 project- based vouchers from the Orange County Housing Authority. Regarding the amendments to the Ground Lease, revisions were requested by U.S. Bank in order for the bank to approve their senior loan for the project. Finally, the Land Use Covenant and the Equitable Community Revitalization Grant (“ECRG”) Agreement with the State of California Department of Toxic Substances Control are required because the joint Housing Authority and County property was found to have environmental contaminants. The Land Use Covenant restricts all future development on the specific portions of the property with remaining environmental contaminants and the ECRG funds will support additional remediation activities. DISCUSSION On July 2, 2019, the City Council authorized the City Manager to execute a pre- commitment letter with The Related Companies of California (“Related”) and A Community of Friends (“ACOF”) for $3,971,440 in affordable housing funds consisting of $3,007,489 in HOME Investment Partnerships Program funds and $963,951 in Neighborhood Stabilization Program (“NSP”) funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) (the “Project”). The Staff Report from July 2, 2019 is attached as Exhibit 1 and the pre- commitment letter is attached as Exhibit 2. On August 17, 2021, the City Council authorized the City Manager to execute a First Amended and Restated pre-commitment letter for an additional $333,742 in Neighborhood Stabilization Program funds to pay for an unanticipated increase in